Mayfair property springs into life
Knight Frank, the high-end London property agent, said prices in Mayfair, one of London's most exclusive neighbourhoods, have risen for the second month in a row.
The estate agent said prices for all prime central London property rose 1.6% in May, four times the growth rate recorded in April.
But Mayfair and Marylebone – another exclusive London area - saw the biggest rises, where prices have surged by 2.9% and 2.7% respectively.
However, prices for prime London residential property are still down nearly a quarter from last year's peak. On an annual basis prices are now down 20.1%, and are down 22.3% from the March 2008 peak, the estate agent said.
Cheaper London properties have led the recovery in prices. The sub-£1m sector has risen in value by 2.7% since March this year.
The £10m+ sector has seen the slowest recovery – with prices only 0.8% higher over the same period.
Liam Bailey, head of residential research, Knight Frank, said: "There is no question that purely in terms of sales activity the central London market is unrecognisable from where it was six months ago. The falls in capital values, cheap debt, overseas investors with dollars and Euros have encouraged buyers back into the market, with many just keen to get on with their lives having put all financial decisions on hold for the duration of 2009."
He added: "The release of this pent up demand has meant that for many of the central London offices sales volumes are up significantly with May being one of the busiest months in the last 18 months with volumes over 30% up on the same month last year. We have even see some bankers back in the market after a noticeable absence."
The report said that the top end of the market (£10m+) is beginning to get busier with Russians that have managed to retain their wealth buying in the best locations as they are keen to place their cash in the UK.
Bailey said: “Supply is still thin across the price ranges. This is particularly acute in the £1-2m range causing great frustration for overseas investors who think they should be able to pick up bargains. The net result of this imbalance is that gazumping is back with the sealed bid system being used again for the first time in 18 months. All this has put a floor under prices, indeed for the best locations prices are up by almost 3% over the last two months.”
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